Starting a small business (pt 6) - Starting Right

Flickr image by jdroth

The fun part of running a business is doing what you love to do and making money doing it. But before that happens, there are lots of nitty gritty details that you MUST look into and deal with first. These include registering your business and making sure you have the appropriate licenses and permits to operate your business. It's always good to remember that taking a couple of hours to deal with the legal hassles early on can save you a whole lot of headaches later on.

So here are 10 steps that you need to look into before you can tell the whole world "I am my own Boss!" :

Even if you have lots of experience in your chosen niche, there's always something new to learn - especially as the OWNER. Starting a business can either be a nerve-wracking experience or a smooth ride - what makes the difference is whether you've done your homework. So, if you're serious about your small business, you need to make time for it, especially in the planning and research stage.

Researching your business means making time to find out all you can about your business which may include the following :

• your, product or service


• who your target market is


• the type of customers to target within your market


• what your customers expect in your product or service


• who your suppliers will be


• who your competitors are


• the types of products and services your competitors offer


• how you can make a better product or service

• How to research your business idea


• Basic Business Research Methods

The first step is to name your business. Every country will have its own laws governing how businesses are named. For example, many states in the U.S. require business owners to register a Doing Business As or Fictitious Name for their business before they can operate. You will need to visit your local company registrar office to request for a name check to be done. If your chosen name is available, then you can register that name. If your preferred name has already been registered by someone else, you will either need to do a name check on a variant of that business name or choose another name.

• How to name your business


• Choose the right name for your business

Most business owners start out running solo (sole proprietor), but as you contemplate setting up a registered business entity and look for finance to expand your business, you might need to take on a partner(s) or set up a corporation. Business structures are important because they define issues like :

• the expected/potential risks and liabilities of your business on its owners.


• the formalities and expenses expected to establish and maintain the various business structures


• what tax situation will apply to you


• your investment needs.

Just as each business is unique in its set up and needs, the choice of business structure must be carefull considered. More information about business structures from :

• How to choose a business structure


• Choosing a business structure

A business plan formally describes the goals of the business, reasons why they are believed to be achievable and how they are to be achieved. The business plan may also include the organization's background and the structure of the business. In simple terms, a business plan is a written sales pitch. Your business plan is critical if you intend to apply for a loan or grant. Lenders will need to scrutinize your business plan before deciding whether or not to extend any fincancial assistance or to approve a loan. It is for this reason that many first time business owners seek the assistance of professional business plan writers to help them.

Links to help you prepare a business plan :

• Prepare a business plan


• How to write a business plan

We covered this in the lens : Starting a small business - Finding the money. Most microlenders will have a cap on the amount that they can loan to you, so it's likely that you will have to contribute to your startup capital by investing your own funds. Digging into your own pockets to finance your business is a good thing because it gives you that all important sense of ownership and also drives you to make sure you don't lose your personal investment.

Find SBA accredited microlenders and other funding options here :

• SBA accredited micro lenders

Business.gov, the official Business Website of the US Government states that roughly half of the businesses in the country are home-based. That probably doesn't take into account the many more people who run part-time money-making endeavors from their home. Because of this high number of "unofficial" home based businesses, people don't realize that there are rules - or zoning laws - that state whether certain types of businesses can be run from a home.

Take for example if you were a skilled wood crafter. You make kitchen cabinets in your garage during the weekends and you accept a "payment" for your product when it's finished. Technically, you would just be considered someone who's working on a DIY project on a personal basis. However as a formally registered business, you cannot run your wood working business in your garage for a barage of reasons like noise and dust polution, increased traffic and hazardous materials.

Check with your local country business administration or government office to find out suitable locations for your type of business. A little bit of extra work in the beginning can mean you don't have lots of headaches later.

Information on zoning laws can be found at :

• http://www.business.gov/start/business-location/home-based-zoning.html

Registering your business can seem like a hassle because you will need to deal with various government agencies and fill up forms. However, the benefits of registering a business formally far out-weigh NOT registering it. For example :

• if you intend to apply for some sort of financing, banks will usually ask for your business registration details.


• you will gain tax benefits and business assistance if you are a legally registered business.


• if you run into problems later in legal issues with customers, suppliers or your products, you stand on the losing end if you are NOT a registered business in the first place.

• Starting a business state-by-state - business registration

As a formally registered business, you will need to pay different types of taxes. What taxes will depend on the type of business you are running, the business structure, how many employees you have and a host of other factors. Just like we learnt in the earlier point on registering your business, registering with your local tax authorities and getting your tax identification number is one of the nitty-gritty details you MUST cover as business owner. Deal with it early to avoid hassles later

For a state-by-state listing of tax authorities, look here :

• Starting a business state-by-state - tax authorities

Depending on the type of business you are running, you may be required to apply anywhere up to 5 (and sometimes even more) different types of licenses and permits. Again, the only way to deal with this is to visit your local state government business administration office or website and get a clear list of all the licenses and permits you need to apply.

For a state-by-state listing of licensing requirements and where to apply for the relevant licenses and permits, look here :

• Starting a business state-by-state - Licenses and Permits

This is probably the most exciting part about being your own boss. Being your own boss can take you to the heights of exhilarion or to the depths of despair, but after years of griping about not being paid what you're worth in your job, you can finally call the shots.

They say success is addictive. The more you achieve it, the more you want it. That seems to be true for many people I know who started out with a small hobby or weekend business and eventually turned it into a full-scale business. They seem to thrive on challenges and constantly look out for new products and niches to venture into.

Fortunately, there are plenty of places and resources you can turn to to learn about running your business. If you're in the United States, there is network of over 300 SCORE (expert business counsellors) who can help you whenever you need it, but wherever you are in the world, you can always find help online.

Flickr image by Mike Dykstra

• You get to call the shots and make YOUR own decisions


• You get to keep ALL the profits or do anything you want with it


• You get to work to your own schedule


• More time for your family and personal interests


• No more long commutes


• Extra income for the famiy


• Extra savings and investments for retirement


• Backup income during recession pay-cuts


• Post retirement activity and income stream